Cineworld lifted by film studio ruling
CINEMA chain Cineworld was the biggest FTSE 250 riser after a US federal judge struck down a longstanding rule that said movie studios are not allowed to own cinemas.
It shares surged by nearly a fifth amid talk that the lifting of the restrictions, which hark back to 1948, could mean that a major studio might swoop on some of Cineworld’s locations.
But analysts have poured cold water on the likelihood of a surge in sales – particularly as the pandemic drives streaming demand while people avoid going out to the movies.
Morgan Stanley’s Ed Young said the Cineworld price move looked overdone as the movie industry focuses on direct-to-consumer offerings.
“We think the case for studios buying exhibitors has been weakened by the development of premium video on demand,” he wrote in a note to clients.
“[Covid-19] has accelerated the maturation of the cinema industry, and with increased focus on direct-to-consumer streaming … the appeal for studios to vertical integration has reduced, not increased.”
The group closed up 6.2p at 41.1p.
Close behind was shipping services provider Clarkson, which jumped 255p to £23.55 after the group renewed its dividend following a strong first-half performance.
In what it called a “robust” showing, the FTSE 250 company raised its first-half profit before tax to £20.9m, from £19.2m last year.
It hailed “particularly strong trading” in its broking division that offset pressures elsewhere.
Chief executive Andi Case said the group has “delivered 17 consecutive years of dividend growth”.
It announced plans to pay an extra dividend equivalent to its deferred 2019 payout. Liberum’s Gerald Khoo said a second virus wave could still put pressure on the group.
Transport companies rose as investors reacted to the Government’s additional £256m bailout for England’s bus and light rail systems to help them keep operating through the pandemic.
The package, which does not cover London, will include a further £27.3m weekly for buses until funding is “no longer needed”, the DfT said. Go-Ahead Group climbed 60.5p to 652.5p, while FirstGroup rose 2.2p to 41p.
On the FTSE 100, banking stocks including NatWest, Lloyds Banking Group and Barclays rose, shrugging off a report in The Sunday Times that warned of a “second wave” of payment protection insurance claims.
Goodbody’s John Cronin said: “Time will tell as to whether or not this is a material issue but we suspect management teams will strongly play down the risks for now.”
NatWest rose 3.5p to 114.1p, while Lloyds added 0.6p to 28.4p and Barclays rose 2p to 106.6p. Manufacturing software maker Aveva also climbed, rising 59p to £45.64, after confirming over the weekend that it is in talks over potentially acquiring SoftBank-backed group OSIsoft.